The Year Ahead: Herman Kok – Brexit is a poker game

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For 2017, the obvious elephant in the room will be the Brexit negotiations, start or lack of them.

With the government treating the process as a poker game (don’t show your cards) and all of us slowly realising that the hand may not contain any aces it could result in continued uncertainty, which is bad for all markets, including the construction sector.

A main driver for a Lincolnshire Brexit vote was the threat of foreign labour.

Ironically, a key Lincolnshire industry, namely the food sector, is highly dependent on foreign labour for it to function.

In turn, the food sector is a major market for the construction industry and if their concerns result in delays in investment it will impact on us.

What is not immediately obvious is how the construction industry impacts on other industry sectors.

A construction project will use bricks, blocks, concrete, steel, glazing, tiling, carpets, fabrics, furniture, joinery products, kitchen equipment, and of course furniture and furnishings – in short, construction impacts on most other sectors of the economy, even legal services and the finance sector.

In simple terms; if the spuds don’t come out of the ground we could all feel the hunger pangs.

Much is made of the shortage of houses in the UK and every government to my recollection has promised initiatives to stimulate house building, but too often governments have introduced conflicting initiatives.

For example; Housing Associations are encouraged to use their balance sheets to fund Social Housing Projects, however at the same time the ‘right to buy’ option for tenants has been extended to include Housing Association stock.

As a result, Housing Associations will be under threat of losing their highest valued assets to a discount market.

Combine this with the introduction of the Universal Credit, whereby the tenant now controls the ‘budget’ instead of the landlord receiving the rent direct from the DWP, resulting in possible bad debt exposure.

When it comes to sustainable housing construction, our industry has developed a house design, which provides for future conversions, wet room, lifting platform etc, to facilitate life-time use.

Yet this falls foul of the Bedroom Tax which puts ’empty nesters’ under pressure to look for smaller, less versatile, accommodation instead of enjoying the benefits of a life-time design.

It is my hope that with the recent declaration of the Prime Minister that she wants to govern and legislate for the benefit of all of us that DWP will, at least, review the negative impact its legislation has on social housing.

When looking at 2017 it is unfortunate but true that it is easier to see problems looming rather than positive change.

My final gripe is the introduction of the Apprentice Levy across the board.

It is clear that this will be a new tax collection instrument. There is a tax-free allowance of £15,000 which takes many smaller companies out of the tax, but equally, there will be the annual threat posed by the chancellor reviewing this allowance when delivering his future annual budget statements.

Our industry already pays a levy to the CITB, the last remaining industry training board, so we are effectively subjected to a double whammy – I know that the government has a full agenda and we can only hope that ministers may have time to consider our plight.